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New York Court Finds There is No Expectation of Privacy in Employer-Owned Email Account

Founding Member of Moshes Law, P.C.
During his years of practice, Yuriy has concentrated in litigation and real estate transactions as his areas of expertise.

In Peerenboom v. Marvel Entertainment, LLC, 2017 NY Slip Op 01981 (1st Dep’t March 16, 2017), the New York Appellate Division, First Department, held that an employee did not have a reasonable expectation of privacy in his employer-owned email account and, therefore, any emails exchanged with his personal attorney through this email system were not protected by attorney-client privilege. For the same reason, the First Department found that any emails exchanged with his wife through the same email system were not protected by the spousal privilege.

By way of background, Plaintiff Harold Peerenboom sued Isaac Perlmutter, CEO of Marvel Entertainment Inc., in a Florida court alleging that Perlmutter had defamed him by sending anonymous mailings asserting that Plaintiff had engaged in murder and pedophilia. Since Perlmutter is the CEO of Marvel and allegedly utilized Marvel’s e-mail server to send and receive emails, Plaintiff issued subpoenas in the Florida action, addressed to Marvel, to obtain any communications sent and received by Perlmutter or his wife via Marvel’s e-mail server that referred to Plaintiff.

When Marvel refused to comply, Plaintiff initiated an action in New York, where Marvel is headquartered, to enforce the subpoenas. Perlmutter, although not named as a party to the New York action, tried to block the production of his emails, asserting that the communications were protected by the attorney-client privilege, the spousal privilege, and the work product privilege. In New York, there are numerous communications that are “privileged,” meaning that the communications are protected from disclosure. Both the attorney-client privilege and the spousal privilege are grounded in the idea that the person communicating had a reasonable expectation that the communications would be private and confidential. The New York Supreme Court, New York County, found that Perlmutter had waived the attorney-client privilege and spousal privilege by sending emails through Marvel’s servers, where Marvel’s policies stated that all emails were subject to monitoring.

The Appellate Division, First Department, affirmed the trial court’s decision with regard to the issue of attorney-client privilege, stating that Perlmutter “lacked any reasonable expectation of privacy in his personal use of the email system of Marvel, his employer, and correspondingly lacked the reasonable assurance of confidentiality that is an essential element of the attorney-client privilege.”

While Marvel’s email policy permitted the use of its email for personal purposes, the First Department found that Marvel’s policy nevertheless indicated that Marvel “‘owned’ all emails on its system, and that the emails were ‘subject to all Company rules, policies, and conduct statements.’ Marvel ‘reserve[d] the right to audit networks and systems on a periodic basis to ensure [employees’] compliance’ with its email policies. It also ‘reserve[d] the right to access, review, copy and delete any messages or content,’ and ‘to disclose such messages to any party (inside or outside the Company).’” The First Department also found that regardless whether Perlmutter was actually aware of the policy, his status as CEO put him on constructive notice of the policy. Therefore, since Perlmutter’s personal emails on his employer’s server were subject to review by Marvel, the attorney-client privilege was deemed waived, as Perlmutter could not have had any reasonable expectation of privacy in his personal use of Marvel’s email system. Similarly, the First Department found that Perlmutter’s use of Marvel’s email system for personal correspondence with his wife waived the spousal privilege.

However, “[g]iven the lack of evidence that Marvel viewed any of Perlmutter’s personal emails, and the lack of evidence of any other actual disclosure to a third party, Perlmutter’s use of Marvel’s email for personal purposes does not, standing alone, constitute a waiver of attorney work product protections.” The First Department instead remanded the case back to the trial court for an in camera review to determine whether the emails are protected attorney work product.

In sum, so you don’t inadvertently waive the attorney-client privilege or spousal privilege, it is extremely important that employees never communicate with their personal attorneys or spouses through the company-owned email system and instead always use a personal email account for these communications. If you are unsure whether these principles apply, it is smart to consult with a New York employment attorney before utilizing your employer-owned email system to communicate with your spouse or personal attorney.

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